Microsoft online subscriptions on hosted shared hardware only for Direct CSP partners; good or bad?

Office365 is a global success with almost a hundred million users worldwide. A lot of organizations consume Office 365 through web based solutions. Customers who have an Office365 E3 or E5 subscription are also allowed to download, install and use Office365 ProPlus, the familiar desktop applications like Word, Excel, Outlook and many more. Office365 Visio and Office365 Project are alike. The right to download, install and use the on-premises software, which comes with the appropriate subscription, on company owned hardware like a PC or laptop is independent from the license agreement type. In relation to what is written above, the same counts for Windows10 as a user based subscription in the Cloud Solutions Provider (CSP) program.

How about hosting?
So far so good, excellent opportunities, lots of choice. But … many organizations over the globe are consuming IT services from hosting providers who are providing these IT services – like a remote desktop – on shared hardware from their ‘third party datacenter’. Are these hosting providers allowed to provide Microsoft online services, like Office365 and Windows 10 in the way described, i.e. installed on shared hardware in their (from a customer’s perspective) third party datacenter?

Yes, but …
The answer to th question is both ‘yes’ and ‘no’. Microsoft makes a distinct difference in what type of Microsoft partner, slash Hosting Provider or Cloud Solution Provider you are. To be allowed to install Office365 ProPlus applications and the Windows 10 desktop operating system on shared hardware servers and provide the software to and end customer, such Microsoft Partner must sign an Qualified Multi Tenant Hosting addendum to their agreement with Microsoft. Note: this is not the end-customer, but the hosting provider which also has to be a ‘Tier 1’ or ‘Direct CSP’ partner. The addendum, and with that the right to do so – is not available for ‘Tier 2’ or ‘Indirect CSP’ Microsoft partners.

To clarify, a direct CSP partner is a Microsoft partner which ‘buys’ online subscriptions directly at Microsoft, bundle them with their own intellectual property or managed services and provides the ‘end customer’ a all-in-one solution. The indirect CSP partner teams with a CSP distributor – which buys at Microsoft – to do exactly the same. Mostly IT companies choose the indirect model when they are somewhat smaller, or want their CSP distributor to perform some tasks for them, like 24/7 support, invoicing services and more.

Isn’t that strange?
In other words: a – mostly somewhat larger – Direct CSP partner who also has a Service Provider License Agreement with the previously addendum signed has the rights to provide Office365 and Windows10 through their ‘third party datacenter’ to end customers.
The indirect CSP partner is not able to do so. Isn’t that strange? Is Microsoft ‘discriminating’ within their own partner community? Is it a missed opportunity for both Microsoft, the hosting providers and indirect CSP Microsoft partners? Is Microsoft directing end customers to certain type of Microsoft partners? Just some questions which pop up.

Your feedback wanted
We hear a lot of ‘reasons’ why the described situation is in the way it is. But far more important is how it ‘could be’ or ‘should be’, so Microsoft, its partners ánd customers have a broader choice and are able to benefit from the technology. We need your opinion. Feel free to share any thoughts and comments with us. This will help us in the conversation with various business leaders at a strategic level within Microsoft corporation. Thank you very much in advance and please do sent us your feedback.